How do you solve the problems with the railways?

September 22, 2010 12:22 PM

Today, Policy Exchange has released an interesting paper about reforming railways so they offer better value for the taxpayer. The key proposals are as follows:

Network rail should be broken down into eight smaller operations, making it easier for regulators to reward the efficient operators and penalise the inefficient.  Though they don’t go far enough, get Network Rail out of the public sector and get taxpayers off the hook for their debts.

End subsidies to companies who bid for train franchises. Companies would have to come up with timetables, fares and compensation for delays themselves.

End the present culture of revenue-sharing. Currently if train operators make a profit, Whitehall will take 80 percent of it and similarly if operators run losses, then taxpayers cover 80 percent of it. This hugely disincentives companies from investing and striving to make profits because it will just be taken by the Government. It also disincentives management from cutting costs because if the taxpayer is there to foot the bill why bother? Although it is unclear how effective this would be if Network Rail remains a majority publicly owned entity.

I have blogged many times before about reforming Network Rail so that the right incentives are put in place to actually deliver a good service that does not involve billions of taxpayers money. Let’s hope the government are listening to these sensible reforms.     
Today, Policy Exchange has released an interesting paper about reforming railways so they offer better value for the taxpayer. The key proposals are as follows:

Network rail should be broken down into eight smaller operations, making it easier for regulators to reward the efficient operators and penalise the inefficient.  Though they don’t go far enough, get Network Rail out of the public sector and get taxpayers off the hook for their debts.

End subsidies to companies who bid for train franchises. Companies would have to come up with timetables, fares and compensation for delays themselves.

End the present culture of revenue-sharing. Currently if train operators make a profit, Whitehall will take 80 percent of it and similarly if operators run losses, then taxpayers cover 80 percent of it. This hugely disincentives companies from investing and striving to make profits because it will just be taken by the Government. It also disincentives management from cutting costs because if the taxpayer is there to foot the bill why bother? Although it is unclear how effective this would be if Network Rail remains a majority publicly owned entity.

I have blogged many times before about reforming Network Rail so that the right incentives are put in place to actually deliver a good service that does not involve billions of taxpayers money. Let’s hope the government are listening to these sensible reforms.     

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